Excess insurance is insurance that covers the insured against certain risks and applies only to loss or damage in excess of a stated amount, or of a specified primary insurance policy or amount of self-insurance.

Although the terms excess liability insurance and umbrella insurance are sometimes used interchangeably, there is an important distinction. Excess liability insurance provides additional coverage for one of your primary liability insurance policies (general liability insurance, commercial general liability insurance) and kicks in with an additional amount of coverage under the same terms as the underlying, primary policy. Umbrella insurance provides additional coverage for several underlying liability policies and kicks in when proceeds from one of those policies reaches its limit.

In insurance industry jargon, both excess liability insurance policies and umbrella insurance policies are said to “sit on top of” the underlying liability insurance policy or policies.

In South Carolina, excess insurance is designed to provide additional coverage beyond the limits of the insured's primary policy. It activates when the primary insurance's limits have been reached due to a claim. Excess liability insurance specifically extends the coverage of a primary liability policy, such as general liability or commercial general liability, with the same terms and conditions, but with additional limits. Umbrella insurance, while similar, is broader; it not only adds higher limits to underlying policies but also potentially covers a wider range of risks that may not be included in the primary policies. Both types of insurance 'sit on top of' the primary policy, providing an extra layer of financial protection. It's important for policyholders to understand the terms and coverage limits of their excess and umbrella insurance policies to ensure adequate protection. State statutes and federal law regulate these insurance products, and policyholders should consult with an attorney to understand how these regulations apply to their specific circumstances.